What 'Korean Miracle'? 'Hell Joseon' Is More Like It As Economy Flounders

Pessimism pervades the Korean economy, from financial to shopping markets, from homes to work places, as China’s economic woes, declining exports and low job prospects gnaw into the fabric of the “Korean Miracle.”

Nowadays, on the streets of Seoul, in coffee shops, on the Internet, you’re likely to find more people complaining about “Hell Joseon” – Korea’s historical name when the Yi or Joseon dynasty held sway for more than 500 years – than talking up the wonders of economic success.

A man pushes a cart containing cardboard at a shopping district in Seoul. South Korea's central bank cut its economic growth outlook for 2016 to three percent, citing lingering 'uncertainties' over a slowdown in key export markets and the won currency. (JUNG YEON-JE/AFP/Getty Images)

As “Hell Joseon” gains currency, you hardly hear the term “Korean Miracle” in a milieu of glittering shopping centers, skyscrapers, expressways, superfast trains and all the hi-tek gadgets and gizmos of an advanced society.

That’s just window-dressing and superficial appearances, says Paik Sang-eun, tutoring students preparing for the critical national examination that will determine what level college they attend – and whether they have a prayer of finding work at a prestigious company or, for that matter, any company.

“I got laid off my job in downsizing,” she says. “Nobody hires middle-aged people. Young people can’t find jobs. Old people are living in poverty.”

The problem is reaching near-crisis proportions while President Park Geun-Hye calls for “a second miracle on the Han River” – the broad, twisting waterway that bisects Seoul.

“The growth rate has not been as large as expected,” Yoo Il-Ho, deputy prime minister and minister of strategy and finance, admitted at a briefing that I attended. “Young people have experienced dissatisfaction.” While the government “has the major policy goal of creating jobs,” he said, “today we are no longer experiencing growth as in the past.”

Yoo, whose long title translates as finance minister, still predicted, “Korea will be back on track to achieve 3.1% growth this year” – a rate “higher than those of many other major economies:”

What’s happening – and what’s likely?

Yoo blames much of the trouble on China, by far Korea’s largest market. “The financial market instability in major economies amid slowdowns in China and other emerging economies has brought a high level of uncertainty to the global economy,” he acknowledged.

One of the most disturbing statistics of late was that exports, on which the Korean “miracle” relies, dropped 18.8% year-on-year in January, raising fears that Korea may be in for a slump reminiscent of the 1997-1998 economic crisis.

But why would the precipitous drop in the price of crude have such an impact on exports from Korea, which has to import all its oil?

As Lee Keun-Tae, economist at the LG Economic Research Institute, explained to Yonhap, the Korean news agency, "Falling crude prices are a big drag on emerging economies, which will inevitably hurt South Korean exports."

With exporters in "acute fiscal crises," said Yonhap, orders from the Middle East for construction, shipbuilding and other industrial products plummeted last year to $14.7 billion, down 52% from 2014 and the lowest since 2006.

Talking to heads of state agencies, Finance Minister Yoo said “exports have been in the doldrums due to fast-falling oil prices, Chinese financial turmoil and Japan’s negative interest rate.” Korea’s corporate sector, powered by the mighty chaebol or conglomerates that control the economy, is “losing corporate competitiveness,” Yonhap news quoted him as saying, amid “low growth in the world economy.”

Even if the economy is not doing nearly so badly as in the dark days of late 1997 and early 1998, Koreans carry bitter memories of what came to be known as “the
IMF crisis” – a reference to the country’s going to the International Monetary Fund to bail out the economy. The IMF at the time issued strict guidelines on credit for debt-ridden chaebol, stopping them from borrowing freely from overly friendly banks with no real collateral to back up the loans.

A poll conducted by Chosun Ilbo shows that a majority of Koreans – 58.6% -- believe conditions are as bad now as they were then. Women – “more sensitive to fluctuation in household finances,” according to Chosun Ilbo -- were more negative than men, 60.1% as opposed to 57%.

That’s not too surprising considering that Korean women, often held back professionally, tend to take charge at home – and household debt led by mortgages, the paper reported from the Bank of Korea, exceeds 1.2 trillion won, about $965 million, up 11.4% from 2014.

Young people are the most pessimistic – 72.7% of those in their 20’s believe the country is approaching a crisis. One student told me that many in the graduating class of his college, embarrassed by their failure to find jobs, don’t attend graduation ceremonies. Most postpone marriages until they’re at least 30, he said, while almost everyone he knows wants to go overseas for work or study – anything to get out of “Hell Joseon.”

The saddest aspects of Korea’s economic malaise is a high suicide rate – highest among the 34 members of the Organization of Economic Development. Suicide ranks as the top cause of death among those aged 10 to 39. At the other end of the scale, suicides are highest among those 65 and older in a society in which children are less likely to care for their aging parents than in the days of yore.

While the air slowly leaks out of the Korean economic balloon, the dollar keeps gaining in value against the won. The dollar, valued at about 1,100 Korean won in January 2015, has soared since then to 1,245 won. That should be good for exports – but not for typical Koreans paying ever higher prices on local markets.

As elsewhere, the sense is that the rich are getting richer while ordinary people are squeezed relentlessly.

“South Koreans continues to suffer from small injustices that reflect the existence of two realities here,” wrote Koo Se-woong in “Korea Exposé," a critical website that he edits. One is “available only to those from the right backgrounds and another that is experienced by everyone else.”

To read more of my commentaries on Asia news, click on www.donaldkirk.com, and the details of my books are available here.

I have reported from Asia since covering the "Year of Living Dangerously" in Indonesia, 1965-66, and the war in Vietnam, Cambodia and Laos in the late 1960s-early 1970s for newspapers and magazines, including the Chicago Tribune and the old Washington (DC) Star. I also wrot...